Use of Donated Funds Most Common Ethical Challenge for Fundraisers

February 2, 2011

Ensuring that charities use funds in a manner consistent with their mission and the intention of their donors is the most common ethical challenge that fundraisers face, according to a new website poll by the Association of Fundraising Professionals (AFP).

Participants in the poll were asked what type of ethical dilemma they were most likely to encounter in their fundraising work and were given seven choices. Nearly one-third (30 percent) of participants chose "use of donated funds." Sixteen percent selected "privacy/confidentiality of information," with 15 percent choosing "donor control over gifts." "Percentage-based compensation/commissions" and "conflict of interest" were chosen by 14 percent of respondents.

"Use of donated funds" refers to ensuring that contributions to a charity are used in accordance with donors' intentions, which includes having appropriate documentation and forms, speaking to donors when circumstances change, following all restrictions on a gift and maintaining proper documentation and records. It can also refer to using donated funds in a manner consistent with how the charity indicated they would be used during the solicitation. AFP's Code of Ethical Principles and Standards contains four standards that refer specifically to use of philanthropic funds.

"The use of donated funds is one of the most important aspects of ethical fundraising, especially as charitable gifts get larger," said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. "The purpose and restrictions on a gift may be clear at the beginning, but as circumstances and the environment change, they may become ambiguous-or the goal for which the money was given may be attained, and other uses for the gift may have to be found. It's critical that fundraisers and donors work together and develop proper documentation to ensure disagreements do not arise."

Maehara also noted that fundraisers who are facing ethical challenges can contact the AFP International Headquarters to receive guidance or speak with a member of AFP's Ethics Committee.

The AFP Homepage Quick Poll is an informal survey where visitors of AFP's website, www.afpnet.org, opt in to providing an answer. Results were based on 569 responses to an informal survey that ran on AFP's website in January 2011.